Anil Pharande. CMD – Pharande Spaces
Property investment only makes sense when the investor is fairly assured of a property’s appreciation and rental income potential. These days, even normal home buyers are intent on getting the benefit of property appreciation and the possibility of good potential rental income when they are buying a home in Pune. Gone are the days when a home was simply a home – today, it is also a means for ensuring future financial security.
It is important for anyone interested in property investment to know how real estate appreciation actually takes place. We have often heard that real estate investment is all about ‘location, location, location’ and this is largely true. However, we also need to understand what it is that gives a location its investment value.
First of all, one needs to consider how much demand exists for homes in a particular area. Then one needs to look at how many projects are being constructed to meet this demand. If the demand is more than the supply, the location has great appreciation potential. If there is more supply than demand, there is an oversupply situation and property appreciation will be low.
Another factor to consider is the existing cost of residential property in the location, and the manner in which property prices have moved. For example, if property prices in a location five to seven years ago were half of what they are now, the appreciation potential is definitely high. This is usually the case in so-called ‘growth corridors’, where a lot is happening every year to develop the area further.
If property prices have moved less than 10-12% over a five-years time span, it means that the area has very little appreciation potential. This invariably happens in city centres, which have been developed to such an extent that no further development is possible.
What kind of new developments cause property prices to shoot up? These include:
- New roads, widening of existing roads, bridges and flyovers, which improve connectivity of the area to other areas
- The arrival of new office complexes or industries, which increase employment and create demand for homes in the area
- Education and healthcare institutes and facilities, and also shopping and entertainment complexes. These increase the comfort levels and quality of life for residents
The PCMC area in West Pune has become one of the most lucrative areas for property appreciation in Pune today. There are many reasons for this:
- West Pune is a developing region, which means that property rates are still rational when compared to hyper-expensive developed areas
- Because it is still developing, a lot of new infrastructure is being put in. Infrastructure is one of the prime influencers for property appreciation
- The fact that residential real estate in the PCMC is being thoroughly planned by the PCNTDA (Pimpri Chinchwad New Town Development Authority) ensures that development is closely monitored. Since the PCNTDA follows a master plan for all real estate development under its jurisdiction, every location gains maximum investment value. There is no chance of oversupply, destruction of the environment or shortfall of necessary infrastructure
- West Pune is a hotbed for growing residential real estate demand because of the huge presence of automobile and other manufacturing industries there. There is limitless demand for homes right from the affordable housing category to the luxury homes segment.